Month: November 2014

The Critical Question: What is the Endpoint?

In July of 2012 I got seriously involved volunteering with Citizens Climate Lobby (CCL) and asked its Executive Director, Mark Reynolds, “What is the endpoint of our campaign?”

Eventually I developed this simple answer: The goal of climate work is to restore a healthy climate. That project consists of two parts: first switching energy sources from fossil fuels to clean energy, and second (and simultaneously) restoring the ice caps, ocean, and atmosphere. This paper describes those two projects and shows how they can be accomplished in 25-40 years while improving the economies of those countries and companies participating.

I had been trained to ask this question at the start of big projects when I began my professional career programming at NASA. My bosses demanded for each project, “What are the specific requirements for success / failure in this project?” In my twenties, I resisted that question, responding in each project, “How could I know? There are too many unknowns, and the project environment will change during the time it takes us to complete it, so there’s no point wasting time now defining success / failure. We’ll work on it madly until the customer is happy.”

I kept that young-adult attitude until I started my own company, and realized that projects can’t go on forever, and the best projects fail or succeed quickly allowing the staff to go onto the next phase or the next project. I became hard-headed about demanding requirements specifications for all projects within a month of their startup. And I insist that the requirements be ones that we can fail at. If we’re on the wrong track, I want to see the failure coming quickly so we can change course.

CCL’s Mark Reynolds answered my climate question with, “Our goal is to get an effective carbon tax passed in the US as quickly as possible.” My response was, “OK, if we do that, what does it accomplish?” I knew well that a carbon tax is the solution that practically all economists and climatologists agree is the policy which would make all the difference to moving us towards ending climate change.

But “making all the difference” isn’t a requirement that we could fail at, and therefore also isn’t one that we could succeed at. Mark, being a genius, responded, “Peter, that is your project now. Dr. James Hansen is on our board, you might ask him.” I spoke with Dr. Hansen, and many other leading climate scientists and got very long answers, which, I hesitate to say, sounded too much like the evasive responses I gave my NASA boss thirty five years ago. After eight months of unsatisfied searching, I decided to write my own tentative “Restoring climate specifications”, and with those specifications, a roadmap to achieving them. Here they are.

A warning to readers: If you have spent a large part of your career dealing with climate related issues, experience shows that you may find yourself having an emotional objection. Although emotional reactions are important indicators of value in many fields, such as music and architecture, in the fields of science, engineering, and policy, value is measured with data and evidence rather than emotional reactions.

You can split your concerns into two parts: 1) Given the technology and finance we have now, what is possible? 2) What are the barriers to realizing that possibility? If it is just political will, then organizations such as Citizens Climate Lobby are designed to create the needed alignment and actions.

The only specific policy this roadmap recommends is a price on carbon, which almost all experts agree is the most important single policy needed. This roadmap is simply based on current market trends and the assumption that financing for clean energy will continue to grow.

Various experts recommend changing policy to expand or shrink nuclear power or CCS (carbon capture and sequestration to extend the use of gas and coal). However it appears that all such programs call for new large public investment, and the articles promoting those investments propose considerably slower transitions away from fossil fuel than the path we are currently on (50 years compared to 25 years). Indeed, most models show that extending the use of fossil fuels for several decades will require significant, probably huge, new public investment.

Technical Summary

Restoring the climate has 2 parts: a) switching from fossil fuel to clean energy; and b) using geoengineering to restore the ice caps and oceans while we restore CO2 levels. Geoengineering can be accomplished for a few billion dollars per year, not trillions. It is too controversial an issue to discuss now, but in a year or so we should be able to have non-emotional discussions about it.

Reducing emissions is an investment issue far more than a consumption issue. Fossil fuels are used in capital equipment such as electrical generation plants, trucks, cars, and furnaces. The capital equipment that now uses fossil fuels must be replaced by clean energy equipment. Fossil fuels will be used until that process is completed. Other factors such as agricultural process improvement will help, but only the replacement of FF capital equipment with clean energy equipment will end our dependence on fossil fuels.

Efficiency improvement reduces the amount of clean energy equipment required, and in most cases insulating a building is cheaper than building the equivalent amount of clean generation. In most cases we prefer to have the market choose between investing in efficiency or clean energy. Either way, we’re replacing the same amount of fossil fuel capital equipment.

Fossil fuel replacement: Looking from an endpoint of 90% replacement several decades from now, backwards towards the present, we see that at some time new oil and gas development will have ceased. Existing Oil and gas well outputs decrease about 5% per year, which is 600 GW / year. (That’s 17 TW X 80% fossil fuel X 5% per year). Therefore wind and solar capacity for electricity, heat and transportation will be expanding at that 600 GW / year rate to replace decreasing oil and gas well output.

When do we stop developing new oil and gas wells? When the clean energy industries are producing the same amount of new capacity each year as the new wells would produce, which is about 600 GW per year. After that there is no economic reason to invest in new wells, and existing wells will be highly profitable cash cows for oil companies.

The following graph shows how this looks for the US, which is more homogeneous than the whole world, and therefore easier to model (spreadsheet here)

This 100 GW / year for the US or 600 GW / year globally includes electricity, transportation and heat. Over a 20-30 year period it is reasonable to replace most cars with electric cars, and furnaces with electric heat pumps. Both of which can be 2-5 times more efficient than the current fossil fuel versions.

New wind and solar capacity have been doubling every 2 years for 10 years. That is five doublings. Three more doublings takes the 90 GW (solar + wind) in 2014 up to the needed 600 GW / year by 2020. About that time new oil and gas capacity will no longer be needed.

In the US, the area of solar photovoltaics (PV) needed to replace the power from all fossil fuel use is about the same as is now planted with corn used for ethanol production. In reality less than half that will be needed because other sources, especially wind, will split energy production with solar.

Capacity factors for solar are 20%, and 32% for wind in most of the world, compared to 45% for natural gas plants in the US, so a factor of 2-4 is needed to account for that difference. However efficiency improvements give about that same factor, and decreasing production costs are expected to reduce costs by a factor of two as well.

If these estimates are off by a factor of two, that would require another two years of growth at the start, and 80% more annual costs. Those costs, $1.8 trillion are still less than half the money spent on oil and gas now, about $4 trillion, and our gas and oil consumption will be dropping steadily. After halting the $1 trillion per year of new FF production costs and reducing FF consumption, we would be saving money by 2025, without even considering the health benefits.

The energy storage market will attract entrepreneurs to build cost effective storage when it’s needed (about 2030, when wind and solar comprise > 80% of power), electric cars (2025), and electric heat pumps (2020). The demand for those gradually expands along with the steady increase of low cost renewable electricity. The 25 year transition period means that vehicles and industrial processes are gradually replaced with efficient electrical versions as the old equipment wears out anyway—capital expenses rise slightly if at all—new technology, such as cars, tends to be lower cost than old.

In some regions nuclear will expand. However future expansion is impossible to predict—it depends largely on if and when melt-downs occur. Of course nuclear will only expand when it is less costly than wind and solar plus storage. When built, it will accelerate the replacement of fossil fuels. There are 60 new plants now under construction in 13 countries, mostly in Asia, and 435 plants in operation. That should increase production by 15% in 10 years.

Coal is not discussed here because China and India, the major users of coal are both committed to eliminating it soon. Bloomberg estimates that “peak coal” will be in 2015 to 2017. A price on carbon will cause coal usage to drop rapidly. The US coal industry employs about 100,000 people, compared to about 1 million now in wind and solar.

A steadily increasing carbon tax will make all of this go faster, and be far better for companies and investors because they’ll have more certainty about future prices and demand for fossil fuels. They’ll be able to confidently invest in future clean energy sources and technologies.

Implementing the carbon tax as a carbon fee and dividend, with 100% of revenues rebated back to households has been shown to produce 2.2 million new jobs, increase the GDP, and save 13,000 lives per year according to a recent detailed study REMI 2014 (summary). The surprising benefit is caused by the shift of revenue from capital intensive oil and gas, via the dividend, to households who spend it locally on labor intensive retail and health.

A carbon fee that increases $10 / ton per year is needed (raising the cost of a gallon of gas by 87 cents after 10 years). Common carbon tax rates are $30 / ton or less now. They do reduce emissions, but only slightly. Studies show that the economic, health, and climate benefits are maximized by a steadily increasing tax. This eliminates the need to guess an optimum rate.

By 2040 we could switch from fossil fuels to clean energy at a lower direct cost for energy compared to continuing fossil fuels. Or we could attempt to maintain business as usual and continue investing in high-cost oil wells and wars and starve the expansion of renewables. It is a choice worth considering carefully.

Why haven’t I heard this before? Paradigms.

The data referred to here is well known in the renewable energy industry. In fact Elon Musk, when he announced Solar City’s new PV factory in NY State in September 2014, said that the global goal is 400 GW / year of new solar capacity, presumably in tandem with a similar amount of new wind capacity. This is the amount of annual capacity required to achieve the 20 year transition described—it appears that Musk is making his plans based on this roadmap, and already a few others are as well.

The reason that this roadmap has not been visible to most of the climate community is because it is based on a new paradigm. The old paradigm for dealing with the climate is “fear”. The goal has been to raise the public level of fear until action is taken. This paradigm worked to get us into WW II, Viet Nam, and Iraq wars, but has not worked so well for the climate. It led to “An Inconvenient Truth”, and a series of IPCC reports, but little effective policy action. Fear, of course, leads to “fight, flight, or freeze”, and during fear, the amygdala in the brain suppresses logical thinking, which is why fear-based political campaigns can be very effective in causing people to act against their best interests.

You might notice that this image produces a different sense about the future, and you might be able see why Hansen and others, looking at his figure, advocate for nuclear power to replace fossil fuels. But you can see that the final ten years of this graph are consistent with the first ten years of our roadmap. Then you can consider whether technological, financial and political conditions now are more similar to 2005-2014 or to the conditions dominating that figure between 1850 and 2000.

The new paradigm is the business oriented approach of picking a specific measurable goal, and then showing a pathway there from the present using existing technology. This approach is antithetical to the fear paradigm because a clear and viable plan reduces fear and blame rather than increasing it.

Comparison to the cell phone industry

The common objection to this roadmap is that the doublings in new capacity from wind and solar simply won’t continue–for historical reasons although not for any specified technical reasons. When looking at Hansen’s graph of US Energy in 1850-2010, we can see why energy experts feel that way. It took coal, oil, and nuclear each 50-80 years to saturate their markets. Many people agree that times have changed since the 1850-1950’s, and maybe we’d be smart to compare the market shift to an internet era market transition.

Cell phones were introduced about 1985 and went through a similar growth curve to what we’re now seeing with wind and solar. There was a series of doublings in the first 12 years, and then an average of 5% per year of increasing market saturation according to the CTIA, the Wireless Association.

You can see the dips after the 2001 and 2008 recessions. Compare this to our roadmap’s similar projection of wind and solar growth rates:

In both cases, the regular doublings slow down after 2% annual market penetration, which is about 5% total penetration. For cell phones the growth rate continued to increase up to 8% per year, while wind and solar will probably plateau at 5% per year, matching declining oil and gas production.

For those comfortable with logarithms, these log graphs compare the market saturation over 33 years for cell phones and wind and solar. Wind and solar grow more slowly than cell phones did, but we’re clearly well down the path (spreadsheet here).

More interesting is the similarity of the costs involved. The CTIA estimates that average cell phone costs are $50 per month, or $600 per year, This totals $200 billion per year in the US, which is roughly the annual investment the US will make to produce the 100 GW / year of new wind and solar capacity between 2020 and 2035.

If we encourage the clean energy industry to continue their growth, there is no technical nor economic reason for them to slow prematurely.

In seventy years society has increased the CO2 level of the atmosphere by 40%, and mostly melted the northern ice cap during summers. We have the power to change the climate quickly for the worse. Scientists have figured out methods to reverse that, but discussion of these technologies has become emotional, in part because of the fear paradigm we’re still using to produce climate action. Any potential solution to climate change reduces fear, and is attacked because it appears to delay effective action.

Without mentioning any specific solutions, and thereby avoiding evoking upsets in many knowledgeable readers, we can discuss actions to take now. We want to produce good research to find what technology will work and what side effects we can expect. A good model for this is the FDA, the US department which insures the safety of drugs marketed in the US. The FDA makes it possible for us to take amazing drugs with a phenomenally low rate of bad outcomes. A similar organization could be created to moderate and control climate engineering research and production.

After such a climate organization is created, ideally by the end of 2015, research could accelerate, and sensible testing begin. We could restore the ice caps, halt sea level rise, and restore normal weather patterns within a decade, while we steadily switch off of fossil fuels, find efficient ways to reduce CO2 in the atmosphere, and restore ocean acidity.

Conclusion

There are trillions of decisions we could make over the next few years regarding energy. The choices we do make depend on what future we’re intuitively expecting right now. This roadmap we are on produces a different intuition of the future than the fear-inducing roadmap of where we’ve been. Publicizing the roadmap will improve economies around the world by getting them in sync with current trends, rather than current fears. The transition from fossil fuels will in turn empower the poor with local jobs in retail and renewable energy that cannot be off-shored.

The roadmap is to continue expanding clean energy as we have been for ten years, until we are producing enough new clean energy each year to replace the energy that oil companies have been producing with new wells. After new oil and gas production ceases, the old wells will decay at a steady 5% per year, giving companies in every industry several decades to implement a shift in their investments to match our new clean energy future.

A steadily increasing price on carbon will accelerate the transition from fossil fuels and make it more profitable for energy companies. Those companies will then be able to make smart capital investments with confidence about how the energy future will look.